Posted: Sun Jun 18, 2017 9:54 pm Post subject: Where are we on the Limits to Growth model?

I thought it would be good to get a sense from the regulars on thoughts on where we, collectively, are on the Limits to Growth business as usual model?

We are in 2017 so should be seeing some of the peaks about now... in terms of per capita and food production.

What do you think we should expect within the next 5 to 15 years or so?

My own thoughts are that another recession is very likely by the end of this decade and a far more severe crisis is looming by 2030 when the world hits a perfect storm of crisis.

My own reading of the debt, economic, energy, water and food crises suggest that we are entering a greater crisis down the line, which we will do everything to postpone for the next decade. Every gimmick will be thrown at the various problems building up in our industrial civilization to avoid facing the inevitable.

In the short-medium term that makes the coming 12 years or so not as bad as some will think, but it will likely lead to a greater systemic crisis in around 15 years from now.

What are everybody else's thoughts?_________________Peace always has been and always will be an intermittent flash of light in a dark history of warfare, violence, and destruction

Financial policy has been to kick debt ever further down the road. This has magnified inequality dramatically, and enabled the elites worldwide to maintain growing incomes whilst the poorest 50% haveat best stood still. They have built up personal debt to unsustainable levels,. Which will be defaulted on at a massive level, which will destroy the paper money that the rich think they own, and at the same time result in social insurection and crime, and social breakdown. What happens after that can not be predicted because the assumptions in the LTG model will no longer be valid. The model was never intended to map the collapse accurately, but just show what needed to be done to prevent it, which clearly is not happening. The energy crisis has not happened as quickly as I expected, so some other limiting factor will trigger the collapse first. It might even be one not included in the model like resource wars.

Just like peak oil, the date is impossible to predict, but the event is now inevitable.

So were they right? We decided to check in with those scenarios after 40 years. Dr Graham Turner gathered data from the UN (its department of economic and social affairs, Unesco, the food and agriculture organisation, and the UN statistics yearbook). He also checked in with the US national oceanic and atmospheric administration, the BP statistical review, and elsewhere. That data was plotted alongside the Limits to Growth scenarios.

The results show that the world is tracking pretty closely to the Limits to Growth ďbusiness-as-usualĒ scenario. The data doesnít match up with other scenarios.

These graphs show real-world data (first from the MIT work, then from our research), plotted in a solid line. The dotted line shows the Limits to Growth ďbusiness-as-usualĒ scenario out to 2100. Up to 2010, the data is strikingly similar to the bookís forecasts.

Yes, the Limits to Growth was not designed as a forecast but the business as usual scenario has been very close to the real world data for over 40 years!

It is therefore only sensible (I would have thought!) to think about whether the signs are that we will be seeing some of the early peaks in the scenario around now._________________Peace always has been and always will be an intermittent flash of light in a dark history of warfare, violence, and destruction

Resource depletion is proving less of a constraint than expected, modern mining and refining technologies are extracting metals affordably from ores previously uneconomic.

Renewables are producing increasing amounts of electric power, in both developed and in developing nations.

I suspect that climate change will be what kills off modern technological civilisation.
Or perhaps a great financial crash, worse than 1929. Consider the scale of rioting and disorder if everyone's savings simply disappeared, could easily result in some new wars.

Or of course a nuclear war in an oil producing area could finish us off._________________"Installers and owners of emergency diesels must assume that they will have to run for a week or more"

Alternatively we could bumble along having problems and finding solutions. PV is making good progress, there is I think a recognition more generally that massive population growth is unhelpful. Migratory pressures are clearly an issue, but those have resulted in policy changes.

In the end my view is that the financial implications of peak oil and gas will have quite an impact, but so will technology and automation.

As long as globally we are harvesting 3 times more resources than the planet can sustain without degrading its carrying capacity we are pushing ourselves ever deeper into collapse. A terrifying statistic is that 90% of mammalian body mass on this planet is either human or domesticated animal. We are eating our way through the remaining global fish stocks and we will be forced to move down the evolutionary ladder very soon.

I'm trying to figure out how war and the armaments industry fit into the graph. Was it considered? Anyone any thoughts?_________________"Buddhists say we come back as animals and they refer to them as lesser beings. Well, animals aren‚Äôt lesser beings, they‚Äôre just like us. So I say fŠĽ•ck the Buddhists" - Bjork

We haven't seen much drop in birthrate worldwide [assuming it's zero scaled]

What? That dotted line has gone down FAR more than the solid, 'prediction' one. To quote an example (that I'm particularly fond of) IRAN has had family size drop from nearly 6 children (in the 60s 70s) to just over 2 (today).

If fundie-Islamic IRAN can do it, anybody (who isn't in the throes of a war) can.

My own view is that we are heading towards another major economic/financial crisis by the end of this decade and it will drag a lot of the Limits to Growth metrics back into line with the business as usual model.

The decline should start becoming very apparent and real within the next few years I suspect.

The Bank for International Settlements said the rot in the global monetary system has not been cut out since the Lehman crisis in 2008.

The current ageing and unstable cycle could finish in much the same explosive way, contrary to the widespread belief that it was a once-in-a-century event caused by speculators.

The end may come to resemble more closely a financial boom gone wrong, just as the latest recession showed, with a vengeance,‚ÄĚ said Claudio Borio, the BIS‚Äôs chief economist.

The venerable Swiss-based institution says the financial system is about to be tested as the US Federal Reserve steps up the pace of monetary tightening.

A decade of ultra-loose money has kept the lid on debt service costs and masked risk.

"Policy normalisation presents unprecedented challenges," it said in its annual report. It could "trigger or amplify a financial bust in the more vulnerable countries."

Fed rate rises will start to drain the global system of dollar liquidity, setting off a dollar squeeze and driving up borrowing costs across much of the world. "The overarching issue is the global economy's sensitivity to higher interest rates," it said.

As candidate Trump said, we are living in a big fat bubble. It will implode at some point._________________Peace always has been and always will be an intermittent flash of light in a dark history of warfare, violence, and destruction

A catastrophic global collapse in industrial output per capita and food output per capita from around the mid 2010‚Äôs onwards.

A massive ongoing rise in global pollution which only peaks in mid-century.
Services per capita peaks around 2020, after which there is a devastating collapse, with a huge drop within 20 years of the peak.

By around 2030 the world economy has started collapsing with ominous implications for the world population which starts to drop from that point onwards.

Just a reminder of my Limits to Growth article written last year. We are (probably) heading into the eye of the storm in the coming years...

Crude oil pricing is always prone to violent swings. Pessimism may now have gone too far. BP‚Äôs Mr Dale says supply and demand is broadly in balance. The drastic fall in upstream investment of the last three years will slowly take its toll on production. The arithmetic is remorseless. ‚ÄúWe expect a material drawdownd of stocks over the second half of the year,‚ÄĚ he said.

Mr Mallinson said the output decline rates of existing fields are running at 4pc to 5pc a year, rising to 10pc for ultra-deep water projects. ‚ÄúNew non-Opec projects in places like the North Sea, West Africa, and the Gulf of Mexico are thinning out, and falling below levels needed to offset natural declines,‚ÄĚ he said.

Energy Aspects say the oil crunch has been deferred but not averted. It will surely hit by 2019 and 2020. By then the world may well be looking at another cycle of booming crude prices.

For now cheaper oil is a 'coup de whisky‚Äô for a lacklustre global economy. It acts as a tax cut for consumers, a form of fiscal stimulus injected directly into the veins of the economy. Ultimately oil crashes correct themselves.

Agree with this analysis. The boom in unconventional oil has postponed the oil crunch to the end of the decade but really it's only a few years in the grand scheme of things. Depletion of other oil sources continues in its remorseless fashion._________________Peace always has been and always will be an intermittent flash of light in a dark history of warfare, violence, and destruction

Another good, thought provoking essay posted at TAE - most of it comes from Brian Davey's book that is available from his site Credo Economics

First up, a resume of where we are at:

Brian Davey wrote:

It is now over 40 years since the original Limits to Growth study was published so it is legitimate to compare what was predicted in 1972 against what actually happened. This has now been done twice by Graham Turner who works at the Australian Commonwealth Scientific and Industrial Research Organisation (CSIRO). Turner did this with data for the rst 30 years and then for 40 years of data. His conclusion is as follows:

The Limits to Growth standard run scenario produced 40 years ago continues to align well with historical data that has been updated in this paper following a 30-year comparison by the author. The scenario results in collapse of the global economy and environment and subsequently, the population. Although the modelled fall in population occurs after about 2030 ‚Äď with death rates reversing contemporary trends and rising from 2020 onward ‚Äď the general onset of collapse first appears at about 2015 when per capita industrial output begins a sharp decline. (Turner, 2012)

So what brings about the collapse? In the Limits to Growth model there are essentially two kinds of limiting restraints. On the one hand, limitations on resource inputs (materials and energy). On the other hand, waste/pollution restraints which degrade the ecological system and human society (particularly climate change).

Turner finds that, so far it, is the former rather than the latter that is the more important. What happens is that, as resources like fossil fuels deplete, they become more expensive to extract. More industrial output has to be set aside for the extraction process and less industrial output is available for other purposes.

Then he goes onto EROEI - and the current state of play:

Brian Davey wrote:

This kind of analysis has been further developed by Steven Kopits of the Douglas-Westwood consultancy. In a lecture to the Columbia University Center on Global Energy Policy in February of 2014, he explained how conventional ‚Äúlegacy‚ÄĚ oil production peaked in 2005 and has not increased since. All the increase in oil production since that date has been from unconventional sources like the Alberta Tar sands, from shale oil or natural gas liquids that are a by-product of shale gas production. This is despite a massive increase in investment by the oil industry that has not yielded any increase in ‚Äúconventional oil‚ÄĚ production but has merely served to slow what would otherwise have been a faster decline.

More specifically, the total spend on upstream oil and gas exploration and production from 2005 to 2013 was $4 trillion. Of that amount, $3.5 trillion was spent on the ‚Äúlegacy‚ÄĚ oil and gas system. This is a sum of money equal to the GDP of Germany. Despite all that investment in conventional oil production, it fell by 1 million barrels a day. By way of comparison, investment of $1.5 trillion between 1998 and 2005 yielded an increase in oil production of 8.6 million barrels a day.

All that just to keep the Potemkin village going. EROEI has gone into decline - terminal by the look of it

Brian Davey wrote:

Further to this, unfortunately for the oil industry, it has not been possible for oil prices to rise high enough to cover the increasing capital expenditure and operating costs. This is because high oil prices lead to recessionary conditions and slow or no growth in the economy. Because prices are not rising fast enough and costs are increasing, the costs of the independent oil majors are rising at 2 to 3% a year more than their revenues. Overall profitability is falling and some oil majors have had to borrow and sell assets to pay dividends. The next stage in this crisis has then been that investment projects are being cancelled ‚Äď which suggests that oil production will soon begin to fall more rapidly.

Oil companies have also been buying back their own shares - ExxonMobile have spent $20 billion doing so and they're not the only ones. This has been done with saddling up with cheap debt and now Fed Chair Yellen is raising those interest rates. What does that tell you about Big Oil's future projects? Are they ever going to come online?

Then onto the current state of the economy:

Brian Davey wrote:

Over the last few years, central banks have had a policy of quantitative easing to try to keep interest rates low. The economy cannot pay high energy prices AND high interest rates so, in effect, the policy has been to try to bring down interest rates as low as possible to counter the stagnation. However, this has not really created production growth, it has instead created a succession of asset price bubbles. The underlying trend continues to be one of stagnation, decline and crisis and it will get a lot worse when oil production starts to fall more rapidly as a result of investment cut backs. The severity of the recessions may be variable in different countries because competitive strength in this model goes to those countries where energy is used most efficiently and which can afford to pay somewhat higher prices for energy. Such countries are likely to do better but will not escape the general decline if they stay wedded to the conventional growth model. Whatever the variability, this is still a dead end and, at some point, people will see that entirely different ways of thinking about economy and ecology are needed ‚Äď unless they get drawn into conflicts and wars over energy by psychopathic policy idiots. There is no way out of the Catch 22 within the growth economy model. That‚Äôs why degrowth is needed.

In short a whole new economic paradigm is required

TAE: The Dynamics of Depletion _________________A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.

The Limits to Growth business as usual model really does look spot on and our current little post-2009 bubble is looking increasingly fragile.

Next decade is going to be fascinating (in a slightly grim way). This is what PS does best, looking at the big picture, joining the dots and working out what is likely to pan out in the coming years._________________Peace always has been and always will be an intermittent flash of light in a dark history of warfare, violence, and destruction